"UKBA was given agency status in order to keep its work at an arm’s length from ministers. That was wrong. It created a closed, secretive and defensive culture.

"So I can tell the House that the new entities will not have agency status and will sit in the Home Office, reporting to ministers."

The announcement will leave the Coalition government open to allegations that it failed to get to grips with the UKBA's failings more quickly, as it comes just a year after the last reorganisation of the agency, and only a day after a scathing attack by MPs on its former boss, Lin Homer.

The all-party Home Affairs Select Committee said in a strongly-worded report yesterday that Ms Homer was responsible for a "catastrophic leadership failure".

MPs warned that it would take the UKBA 24 years to clear an immigration and asylum case backlog.

Mrs May said she hoped the changes would make it easier to cut backlogs and increase the number of illegal immigrants who are deported.